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- A bear market in gold is still in force from 2011.
- Monetary policy, while unsustainable and promoting inequity, is working for now.
- Goldzilla will rise up one day to tear it all down.
- But you need to be patient and intact when the time comes for macro change.
Gold Bug Psychology Must Be Neutered
- A bounce is likely amid over-bearish sentiment.
- Though the case for gold as insurance against a leveraged out of control system has never been better, market realities dictate the interim phases.
- The active phase since gold's previous bull market ended in 2011 has been risk 'ON' amid a speculative atmosphere promoted by global policy making.
- Gold will, as they say, have its time. But please check your bias and assumptions at the door in the interim.
A Simple View Of Gold
- The monthly technicals are bearish.
- 'Indian Wedding Season' and 'China Demand' are the products of lazy analysis and are not reasons to be bullish on gold.
- Gold will turn when confidence in policy making turns (our best guess is at the 1000 +/- support shelf that marked the bottom in confidence in 2008).
- In the meantime, a bounce in the gold sector is possible.
Currencies And Gold: The Big Picture
- USD and Yen would likely rise in a liquidity crisis.
- Swiss Franc and Indian Rupee have been the best currencies for the longer term.
- Commodity currencies (Canada and Aussie) are bearish.
- Gold, which provides no function other than monetary value retention, bides its time.
U.S. Stock Market Update
- Option 1: Market takes a correction in July to relieve over bought, over loved status. This is potentially a healthy pause to refresh before new highs.
- Option 2: Market channel bursts upward and momentum fuels an upside blow off that would be terminal to the bull, a la 'Silver 2011'.
- We lean toward Option 1 for now.
Gold's Value Is Not About Currency Collapse
- Gold vs. commodities (i.e. gold's "real" price) is in a major secular bull market.
- Gold has been kicked to the curb amid major confidence in policy making and resultant asset market increases.
- Only when confidence in policy and the targeted asset bubbles deflate will the best case for gold come to the fore.
- The US dollar would initially benefit if asset markets were to liquidate.
ZIRP Gains More Attention
- Mainstream economist highlights what we have been saying for well over a year.
- That is that ZIRP is destructive, not constructive.
- The "bubble" has been in policy.
U.S. Treasury Bonds, Gold And The Stock Market
- Our monthly "Continuum" chart anticipated a misstep for the "Great Rotation" crowd.
- Yields are now approaching support, and we are no longer bullish on T bonds.
- Beyond nominal bond considerations, the T bond market is key to in-depth macro analysis.
Gold, Silver And The Macro
- Gold's daily charts are bearish.
- Silver's daily charts are bearish.
- A potential bigger picture bottoming stance is still in play.
- Meanwhile, gold and silver bugs can use the relationship between the metals in macro analysis.
Stock Market: When Bad Is Good And Good Is Bad
- The US stock market may accelerate higher in the short term.
- The US stock market may take a hard correction in 2014 to test the big picture breakouts.
- The more bearish long-term scenario is #1 above.
Giving Bears Pause
- 2014 has been bearish for much of the market, outside of the Dow, S&P 500 and Transports.
- Various indicators beneath the surface (like the BKX-SPX ratio) are flashing bearish signals.
- Yet the state of the Semiconductor index and a mainstream media in bear mode are among the bullish caveats.
ZIRP Era In Pictures
- ZIRP is 5+ years in the running.
- ZIRP has severely punished savers.
- ZIRP has rewarded speculative asset owners.
Pigs No Longer Fly; What Are The Implications?
- Interest rates indicated to continue declining.
- Gold bottom would be indicated as confidence erodes.
- Economic deceleration would be indicated by a declining BKX-SPX ratio.
Commitments Of Traders: Gold, Silver, CRB And T-Notes
- Gold and Silver CoT shows room to move lower prior to a bottom.
- CRB CoT is bearish from a contrarian view.
- 2 year T Note CoT implies a coming rise in yield curves.
Gold Contrary Indicators
- Gold is relevant to monetary events.
- Inflammatory analysis such as the recent Ukraine hype should be tuned out.
- Gauging sentiment in gold is a reliable indicator to bull and bear phases.
Is The Yield Curve Really Flattening?
- The curve is flattening when measuring long-term yields to shorter term (2, 3 and 5 year).
- The curve is elevated along all durations when measured against the Fed Funds Rate (ZIRP).
- The system has an ongoing distortion built in by this dynamic.
Gold's Macro Fundamentals
- Tune out "China's demand drop".
- Tune out Ukraine style crisis hedge talk.
- Interest rate spreads are among the most important macro fundamentals for gold.
ZIRP Up Next?
- Zero Interest Rate Policy has been ongoing for 5+ years.
- S&P 500 is running alone this time with ZIRP pinning T Bill yields near zero.
- An inflationary or deflationary case can be made from this distortion.
- 3-D Printing: No Barrier To Future Losses For Investors
- Precious Metals Grind Out A New Trend
- Gold Mining Is Counter Cyclical
- Precious Metals: Risk Management To Opportunity
- To Taper Or Not To Taper? It Is A Double Edged Sword For The Fed
- Janet Yellen Nails It
- '3 Ps' Supporting Massive Market Speculation
- A Cyclical 'Mini-Me' To A Big Secular Event
- Insurance For A 'Wonderland' Market
- Gold Fixation
The Outer Limits Of Monetary Policy
Oct. 2, 2013 • 3 Comments
As The Debt Ceiling Kabuki Dance Starts Anew ...
Sep. 27, 2013 • 2 Comments
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